As a politician, Winston Churchill was probably the greatest orator in history. His inspirational speeches have been copied and reworked from generation to generation, a template of the “chain of destiny.”
Yet, perhaps, Churchill’s instinctive and insightful view of the nature of politics illustrates the challenge facing President Xi Jinping, with the trade war between China and the United States escalating, while problems mount on the domestic front.
“A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, and next year,” the iconic British prime minister, said. “And to have the ability afterwards to explain why it didn’t happen.”
Xi and the Communist Party’s propaganda ministry, which has been rebranded into the Publicity Department of the Central Committee of the CCP, are struggling to do just that as they are dragged deeper into the conflict with Washington, while realigning the economy and pushing ahead with the controversial “Made in China 2025” policy and the Belt and Road Initiative.
For more than two decades, China was the poster child of economic development and during the past 10 years a major driver of global growth during the Great Recession in the West after the financial crisis in 2008.
But as Europe and the United States gradually recovered, cracks in Beijing’s progressive image started to appear. The program of reforms, which had turned the country into the world’s second-largest economy, started to slow, and government subsidies for key industries and state-owned enterprises gathered pace, despite a cosmetic headline-grabbing approach to shrink the bloated SOE sector.
‘Forced technology transfer’
Intellectual property violations continued along with the practice of “forced technology transfer” for foreign companies doing business in China. “Promise fatigue” also set in as Xi’s government constantly talked about further opening up the economy to overseas competition without producing a detailed timetable of when the changes would be implemented.
Finally, patience snapped in the US under President Donald Trump’s administration and even inside the European Union, which launched legal proceeding against Beijing at the World Trade Organization in Geneva last month for “unfair technology transfers.”
“[There is] a sense of disappointment that China’s WTO accession didn’t do more to transform the rules of the game inside China’s own market,” Brad W. Setser, a senior fellow for international economics at the Council on Foreign Relations, wrote in a blog post.
“Expectations that China would have to change, politically and economically, to succeed in the global economy haven’t been born out, as Ely Ratner and Kurt Campbell argued in Foreign Affairs,” he added.
“China’s Communist Party hasn’t been tamed by commerce. The Party-State still has firm control over the commanding heights of China’s economy – both directly, and indirectly, through its influence on large “private” companies (who can only remain both successful and private with the support of the Party),” Setser concluded on the website of the nonprofit think tank based in New York.
Grappling with this new reality has forced China to reevaluate its relationship with the US and to a lesser extent the EU. Yet it could not have come at a worse time as concerns increase about a cooling economy, and the effects of Beijing’s two-year battle against corporate and local government debt.
On Tuesday, the latest official data from the National Bureau of Statistics showed that factory activity dipped. The Purchasing Managers’ Index, or PMI, a key economic barometer, came in at 51.2 for the month, down from 51.5 in June.
Although the numbers indicate a downturn, they were above the 50-point mark, which separates expansion from contraction. Still, manufacturing sentiment has been hit by the trade dispute.
“Despite their outward firmness and rhetorical bravado (President Xi Jinping has vowed to ‘punch back’), Chinese leaders must be deeply worried,” Minxin Pei, a professor of government at Claremont McKenna College and a non-resident senior fellow of the German Marshall Fund of the United States, wrote in the Nikkei Asian Review.
“The rupture of Sino-American relations in the last few years is undoubtedly a strategically calamitous development few in Beijing anticipated,” he added.
Behind the scenes, a rare debate has emerged between the People’s Bank of China, or central bank, and the Ministry of Finance on measures to combat the changing economic landscape, while there appears to be a reshuffle at the top with Vice-Premier Liu He taking on the toxic brief of pushing through SOE reform.
So far, it is unclear whether he will still play a role in discussions with Washington if they resume amid reports that Beijing was caught off guard by the depth and scale of Tump’s trade assault, and his condemnation of the broader “Made in China 2025” policy.
What followed has been well documented. Tit-for-tat tariffs were rolled out before the White House announced plans at the end of July to launch proposed duties on the entire list of Chinese imports worth US$500 billion.
China left isolated
To increase the pressure, Trump then thawed out relations between the US and the EU last week, following discussions with European Commission President Jean-Claude Juncker. This, in turn, left China isolated.
“When they announced an alliance against third parties’ ‘unfair trading practices,’ they didn’t even have to mention China by name for listeners to know who their target was,” Donald L. Luskin, the chief investment officer at Trend Macrolytics, a macroeconomic research firm and consultancy, wrote in the Wall Street Journal.
“Cooperation between the US and EU will squeeze China’s protectionist model, and even before this agreement, there’s been evidence that China is already running up the white flag,” he continued. “Yes, China is acting tough in one sense, quickly imposing tariffs in retaliation for those enacted by the Trump administration. But while US stocks approach all-time highs and the dollar grows stronger, Chinese stocks are in a bear market, down 25% since January.
“The yuan had its worst single month ever in June and is well on its way to a repeat this month. Chinese corporate bonds have defaulted at a record rate in the past six months, yet this week China unveiled a new stimulus program designed to encourage even more corporate borrowing,” Luskin added.
Significantly, this is exactly what the International Monetary Fund warned against on Friday when it predicted 6.6% growth this year compared to 6.9% in 2017.
Indeed, this paradox of squaring the circle would not have been lost on Churchill.
IT’S a sleek international airport built just five years ago at a whopping cost and appears to be straight out of passengers’ wildest dreams. So why is it becoming a disaster?
The Sri Lankan airport, named after former President Mahinda Rajapaksa, was funded with high-interest loans from China. It’s been reported the country has been struggling to repay them.
BRI…. zombies hahaha
Are you tired of the lies the CCP tells you ?
Vamshee Devulapally Or he’s a sad old man who has failed in life.
But we have larger weapons, and your ladies seem to prefer us.
Gordon Watts. Of course it seems like when it rains it pours. Just when China is preparing to graduate and transcend from a situation where its current level of manufacturing labour costs has lost most of its comparative low wages advantage of the past and it has to shift quickly to high technology innovation i.e. be where the U.S. is now – making money from royalties and services and premium value on brand names, it gets hit with a Trump ‘fabricated’ trade war. As an economist I have dealt with this ‘fabrication’ in the past. The real deficit of the U.S. is due to its military largesse and its people spending more than what they have actually earned. All other allegations are false when you look at the entire balance sheet of payments and receipts, including non-trade and services and invisibles. Yes, it is just like China is being asked to play tennis finals when it has the flu. But so be it. When the going gets tough the tough gets going. 6.8% annual growth rate is not terminal. Statistical data must be read in its relative perspective and taken within context. A healthy young child is expected to grow in quick spurts but for a fully grown man to continue to grow in equally quick spurts would be fatal! But China has a big population and most parts of the country are still impoverished and underdeveloped. China just has to make internal domestic adjustments and shift any idle capacity and slack from the Eastern seaboard inland to the other China to rehabilitate and stabilise and balance the economy.
Vincent Cheok @ https://whirlwindrambler.com
President Xi and his advisors have read the tea leaves incorrectly——-and will pay for this blunder———maybe becoming King of the Middle Kingdom has caused Xi to think he was becoming King of the world. The Chinese fell into a trap of there own making ——–they thought the American leadership were a bunch of dummies and fools——–especially after the last four horrible Presidents who gave away the store——–this game is about leverage——–the Chinese have none——–and they are about to find out what a LEADER does in a dust up———-welcome to the world of President Donald John Trump!!
Watts is an US propagandist. A perceptive reader mentioned PC Roberts. Roberts was former Asst. Treasury Sec. under Reagan and a very reasonable man. I quote Roberts:
" America’s extremely serious trade problem is due to globalism, neoliberal economics, and to the New York investment banks.
The US trade deficit with China has its origin in the offshoring of American jobs. Products, such as Levis, Nike shoes, Apple computers, once produced in America by American workers are now produced abroad where wages and various compliance costs are much lower. When these products produced abroad for American markets by US corporations come back to the US to be sold, they arrive as imports. Thus, the offshored production of US corporations is the most direct cause of American trade deficits.
However, this basic, indisputable fact is never reported by the presstitute media, or by the neoliberal economists or US government statistical agencies. The pretense is that it is all China’s, or Mexico’s, or Canada’s fault. You would never know that it was the direct result of the profit-seeking activity of US corporations."
Watts wrote: "Intellectual property violations continued along with the practice of “forced technology transfer” for foreign companies doing business in China."
There are the courts in the US and China and the Arbitration Panel in the WTO where cases of " forced transfers" and stolen IP can be filed and heard for settlement and compliance. The fact that propagandists like Watts never mention a single court case and the resulting judgement indicates that they are spreading fake news.
Their tactic is to repeat these fake news ad nauseum until it becomes truth.
Watts love to believe that China is isolated just like the neocons love to believe that Russia is isolated. Immediately after the Trump – Juncker meeting, Macron of France VOICED OPPOSITION to an overall US-EU Trade deal that would damage Frances’s industries.
UK had just recently jointly announced with China strong support for the multilateral trade system during the recent visit of UK’s FM to China.
I think the author makes some great points. The most important being that the US still has ample influence on the world economy to possibly defeat worthwhile endeavors undertaken by other countries.
“[There is] a sense of disappointment that China’s WTO accession didn’t do more to transform the rules of the game inside China’s own market,” Brad W. Setser, a senior fellow for international economics at the Council on Foreign Relations,
The above reflects a common attitude in the US WHICH IS EXTREME ARROGANCE exemplified by such phrases as: " shining city on the hill," "exceptional", " the greatest nation", meaning the US can do no wrong and the rest of the world must follow. So when these idiots perceived some negatives, they assume victimhood and put the blame on others because the US can do no wrong.
Arrogance of US politicians, officials and so-called think tanks are very dangerous for the world and has been very destructive, killing and destroying around the world, full spectrum destruction.
Why should China transform the rules of the game inside China’s own market ?? What happens inside China’s own market is within the sovereignty of China and has nothing to do with the US. If the US does not like the China market they can stay out. But the fact that US companies operate in China, AND Tesla planning to do so indicates the happenings in China market is good for business to the chagrin of US politicians, officials and think tanks.
The only thing left for you to do is to sing the Chinese national anthem.
You are either definitely a bot or a chinese paid troll!!! LOL!!! Its obvious.
Gordon is so out of touch with reality that I have to call this article either an "ignorant rant" or "propaganda BS". Knowing the contributors of AT .I will go with the latter.
No matter how far out we forecast an economic outlook between the US and China……..we already know the answer to this. How many times since the 90’s have ‘western economic kooks’ have been proven wrong on China?
Kevin-Maricko McCoy, Donald Trump is not punishing those took advantages of American enough, raising tariff betrays the American is venerable, they rely on others to survival, so nobody will take American seriously. Donald Trump should ban imports from all those took advantages of American, ban imports from Germany, EU, Japan, Korea, India, of course China too. The bonus of banning imports is forcing all American businesses move their overseas operations back to the USA and create jobs in the USA.
To stop American technology from being stolen, Donald Trump should also ban American exports, build a wall around the USA is the best way to make America great again, mind you Donald Trump can make Germans, Europeans, Japanese, Koreans, Indians and Chinese to pay that wall too.
Kevin-Maricko McCoy
I see you like the word " Stoogès just like the robot you are. The DNC uses stoges to discredit anyone who will not jump into line with what they are selling. Obviously you are one who dare not step out of line. So the US will give you an approved stamp on the forehead as a good little ………..well " Stooge."
Predictions of China`s demise are like the people who wear signs around their necks saying " The end is near". I think Jesus was saying that some 2000 years ago andhere we are still trucking along. One thing the author gets wrong along with pretty much all western journalists and experts is that they judge the Chinese Governments problem solving system as being the same as that in say the dysfunctional USA. It is not the same at all. China has a unified approach to problem solving. it works like a company rather than a bunch of school kids having a food fight in a cafeteria, which is the essence of US politics. The CCP works for the good of the nation. The welfare of the country comes first, unlike the West where it is every man for himself. Thats why while the West has driven millions into poverty over the past thrity years China has risen more than seven hundred million people out of poverty. China will counter the USA. But they will not rush into anything. They will take their time and when they are ready to act there will be results. The US has started this trade war, China will finish it.
China and their stooges are going to learn very quickly stealing and market manipulation which has occurred for years despite being granted trade with USA and the WTO has come home to roost! The Communist government who control very facet of trade MUST CHANGE to work with open markets or the Chinese people will lose what blessings they have been given and revert back to 3rd World status. All the bellicose statements by the Chinese trolls here will not change this reality. The free ride is over!
USA ECONOMY N DOLLARS are nearer the downfall cliff … .
This is all white supremacy shits.. ..Wait n see who is the last winner win. ..
China has said all the while that it will open up its economy at its own pace and time. It will not be dictated by any outside power. You keep keep dreaming about how China is raising the white flag when the trade war hasn’t even begin.